This blog looks at news items and views and indicate the impact on the middle classes. The middle classes are over-taxed, over-worked and over-exhausted. Yet if they don't join hands and move, they will get more of the same treatment from the existing parties. This is a call for political action. This party may not yet be a political party.Its a party nevertheless to what is happening. And this party is ON!
There is now a linkedin group called Party for the Middle Classes

Tuesday, October 11, 2011

Why should a poor country receive subsidies on one hand and contribute to a bail out fund for a richer country? If this doesn't make sense to you, then how can you convince Slovakians?

The thing is that within Slovakia, the politicians know that they're using Slovakian middle classes to make money for the rich Slovakians.

That doesn't mean that the rich Slovakians will agree to pay for the rich Greeks !!!!
Because, any bail out fund means less rich paying for richer ones who go on extravaganzas.

The problem with the Greek debt, and the Spanish and many others is, as I have said before, that the Germans and the Dutch and a few other richer countries in the EU no longer want to provide subsidies to the problem countries in return for markets they have already conquered and which they exploit annually.

If the transfer payments continued, from the richer countries, to these poorer countries (even if they are not the poorest with new members coming in) on a regular basis, there would be no problems.

But the German people are not told that their rich German firms have made so much money from the Greeks and the Spanish. Otherwise, the German middle classes would at the very least ask why their taxes are not coming down !!! The answer is that the richest in these rich countries (Germany is only an example since it is the mightiest) exploit everyone: Germans, Greeks and if they could get away with it, even Slovakians.

Now they are going to find a way to get the Slovakians. And they'll make it sound as if Slovakia got a good deal by being allowed to bail out Greece. Yes, that day will come.

The European Banking crisis is meant to duplicate in Europe what is déjà vu in the US.

In a very very summary fashion, in the US, banks created a mess by doing their jobs sloppily.
At crisis time, they shouted wolf: if we fail everyone fails
They were bailed out by the middle class tax payers
The managers got bonuses because they were depressed.
They may have provided kickbacks to politicians.

Politicians learn lessons from history.
They apply lessons learnt in one country (usually the USA) to others.
So, they are repeating a scenario.
Unfortunately, for them, with a rise of literacy, many others have read the same history.
We know what it is all about and how saving Dexia and other banks will be paid by the middle classes.

What about the wolf? Isn't there real danger out there?
Guess what? If there was real danger, the rich would be the first to avert it. This is spelt CONSERVATIVE.
As Veblen said in 1904, money is made by creating crisis and booms and profit by buying low and selling high or selling high and buying back low.
Therefore, the super rich need to create crisis to buyback what they've sold.
They will make money anyway.
Might as well nick the middle classes on the way.

What would be the solution?
The answer is do nothing.
The ideology is the equity market bears the risk: upside AND AND AND downside.
How will this work?
If Dexia, for example, is failing, its share price should fall.
When it becomes reasonable in line with the current management's capabilities, they should issue new shares in an IPO.
If IPO price per share is low enough, investors will rush in and change the top management.
They will get rid of the lousy high-flying managers and keep only the good solid middle class ones.
One day the price will rise again, otherwise another IPO at an even lower share price.
When it fails, it fails.

What about the small middle class savings deposits?
They are insured anyway. No point paying insurance and worrying about it.
After all, insurance companies are not meant to just cash in insurance premium with no risk.

As you can see, vested interests such as existing top managers (useless bunch?) and insurers have a vested interest that the banks be bailed out.
The middle classes have an interest in letting bad banks share price fall till it is worth buying. If it falls low enough, even middle classes will buy some shares.

Why should risk averse tax payers be paid to pay for risk seeking managers and investors?
Let them fail and come back to reality.

Politicians who do not understand this should also be kicked out. How can they do the political horse wrangling if they don't understand all this? If they don't understand who votes them in? Otherwise, they may as well take jobs as managers within the banks and get kicked out by the investors who take over.

The middle classes owe a responsibility to themselves and to the poor to kick out these politicians if they do not take appropriate actions but steal middle class taxes to favour incompetent bankers rather than build infrastructure for the poor and the middle classes.